After 18 years with Diageo Andy Fennell (photo), currently President, Diageo Africa and a member of the Executive Committee since 2008, is leaving Diageo at the end of the current fiscal year. John O'Keeffe, currently Managing Director, Guinness Nigeria, is to be appointed President, Diageo Africa, joining the Diageo Executive from 1 July 2015 and reporting to Nick Blazquez, President Diageo Africa & Asia. In addition Diageo has today announced that Soren Lauridsen will be appointed Managing Director, Guinness Nigeria following a transition with Andy and John during May and June 2015.

Ivan Menezes, Chief Executive Diageo, commented:
"Andy Fennell has decided to leave Diageo after 18 successful years when he has been Global President for Smirnoff, Chief Marketing Officer and more recently President of our African business. We wish him every success as he reaches out for new challenges.
"We have been able to ensure a smooth transition for both Diageo's African business and for Guinness Nigeria. John O'Keeffe will bring marketing and general management experience to the Diageo Executive and his experience in innovation will be key as we look to increase our mainstream spirits business in Africa. Soren Lauridsen has already joined Diageo and will bring strong leadership skills to his new role in Guinness Nigeria from a career which has taken him from the Nordics to Asia and from Unilever to Carlsberg and now to Diageo. I look forward to working with them both to achieve our ambition."
(Diageo plc)

Heineken will not be launching its sweeter, low-alcohol Radler beer in Kenya. It will instead focus on its flagship brand to grow local market share, Business Daily reported on May, 21.

The Dutch brewer, which set up in Kenya in 2011, says it will use Heineken beer brand to reduce the dominance of East Africa Breweries Limited (EABL), especially in the premium category.

The firm is wooing female African drinkers with Radler, a beer made from malt and lemon, to grow market share in a continent dominated by rivals SAB Miller and Diageo — which has majority shares in EABL.

“Radler is not and will not be launched in Kenya,” said the brewer’s general manager East Africa, Koen Morshuis, in an e-mail interview. “Within the East African market Heineken is only focusing on its flagship brand Heineken.”

East African market is increasingly becoming a battle zone between SABMiller and Diageo as both firm’s race to grow their regional footprint.

The number three global brewer, Heineken, has been a late entrant into the region after opening the regional headquarters in Nairobi in 2011.

The headquarters is in charge of marketing while distribution is handled by Maxam Ltd, which is associated with businessman Ngugi Kiuna who has held the franchise since 2007. Heineken has been expanding in the African market, having invested $2.2 billion since 2005.

Siep Hiemstra, head of Heineken’s African operations, said on May 13 that beer consumption on the continent was still predominantly male.

EABL chief executive Seni Adetu said the brand comes at the right time as it will boost the company's portfolio as a direct response to the current need to offer female consumers a greater choice in the market.

Snapp will be available at a suggested retail price of KES120 ($1.45). EABL plans to invest KES3.9 bln ($0.04 bln) for a new canning plant in the country to boost the uptake of its products.

19.03.2012 Africa: SABMiller ratcheting up production of more affordable beers using sorghum and cassava
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Africa's biggest brewer SABMiller is ratcheting up production of more affordable beers in the continent using sorghum and cassava in place of more expensive barley to drive growth in what is already the group's fastest growing region, Reuters reported on March, 13.

The London-based brewer's Africa region - minus South Africa - produces 13 percent of group profits, and strong beer volume and earnings growth is being driven by its biggest markets such as Tanzania, Mozambique, Zambia and Botswana.

A large part of the strategy directed by its African regional managing director Mark Bowman is to make beer more affordable and less of a luxury product than when it is priced at around $1 a bottle across the continent.

"By African standards, beer is expensive so we look at sub-inflation pricing and to develop an affordable category," Bowman said.

He says that the outlook for the beer industry in Africa is sound with strong GDP growth of 4-6 percent per annum and population growth of 2.5 percent, and within that framework a low priced entry to beer drinking is extremely important.

The world's second largest brewer and maker of brands such as Castle, Miller Lite and Peroni has set ambitious annual targets for Africa to grow volumes 6-8 percent and earnings by over 10 percent, and Bowman says the main limiting factor is capacity constraint after a recent spurt of growth.

Using locally-produced sorghum and cassava rather than pricey imported malting barley is key to this strategy as is the increasing use of keg beers rather than bottled ones and encouraging traditional cloudy sorghum-made Chibuku beer.

Although sorghum and cassava is around 60 percent the price of malting barley, there still needs to be a cut in excise tax to reduce the price of these beers significantly which has seen them sell well in Uganda, Kenya and Mozambique.

SABMiller's Tanzania managing director Robin Goetzsche says tax breaks are key to producing more affordable beer as only 17 percent of a bottle of beer is the liquid inside, with the rest accounted for by packaging, marketing, distribution and tax.

In 2004, SABMiller introduced its first sorghum beer Eagle in Uganda which now accounts for half of its 55 percent market share, and with major competitor Diageo also seeing success, around half of Uganda's beer is sorghum-based.

In the East African nation, the sorghum beer enjoys half the excise tax of barley-made beers, and so with lower production costs and tax its Eagle beer sells at 70 percent of the level of mainstream beers such as Nile Special and Club Pilsner.

"We need to get the price down to 80 percent of mainstream to get a big kick in demand," Goetzsche said.

The strategy has not worked as well in Tanzania as the nation has a more moderate excise tax regime and the cut for sorghum-based Eagle was only to 75 percent that of barley beers, and so only allowed Eagle to be priced at 88 percent of its mainstream national beers brands Kilimanjaro and Safari.

This was not sufficient to boost demand and Goetzsche says the brand which accounts for around 5 percent of the group sales has seen a volume decline of 12 percent, in a country where SABMiller expects its overall beer volumes to rise 17 percent in the year to end-March 2012.

This has been offset by the success of its mainstream beers and the recent launch of Castle Lite, and he is expecting annual earnings up 15 percent in SABMiller's biggest market in its Africa region where its market share has risen to 73 percent.

While sorghum has been used in Uganda and Tanzania, and by Diageo in Kenya to replace barley as a source of starch, further south in Mozambique, SABMiller is using the staple root crop cassava with encouraging results over the last few months.

Its first cassava beer, named Impala, was launched in late October and within just over 2 months had taken 1.7 percent of Mozambique's beer market and has boosted output at SABMiller's third and newest brewery at Nampula in the north of the country.

SABMiller's Mozambique managing director Grant Liversage says the group negotiated with the government to pay a quarter of the excise tax for its beer, and is planning that cassava beer will soon make up a third of production at Nampula which would see its national market share rise above 5 percent in a market where the brewer has an overall share of over 90 percent.

The use of cassava and the tax break allows the beer to be priced at 70 percent of mainstream beer brands like 2M and Manica and its success has encouraged him to believe that the beer brand could replace its barley-based economy brand.

The cassava crop is processed by a mobile operating unit close to the growing crops and transported to the brewery where it makes up 70 percent of the starch requirement for brewing with the other 30 percent coming from malting barley.

"There is a huge cassava crop in Mozambique, and cassava growth and some barley development will be our major initiatives for the coming year," Liversage said.

16.03.2012 Diageo Africa Business Reporting Awards 2012 launched to celebrate top business journalism on Africa
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Diageo, the world’s leading premium drinks business, launched its annual Africa Business Reporting Awards for 2012. The Awards, initiated by Diageo in 2004, recognise journalists and editors who provide high quality coverage of the business environment in Africa. Diageo believes that better and more accurate reporting plays a critical role in framing Africa’s economic prospects and challenges. It encourages greater interest in doing good business, which in turns creates the right environment for sustained prosperity on the continent.

Nick Blazquez, President, Diageo Africa, outlined the importance of the Awards:
“Business interest in Africa has clearly accelerated as the world focuses on the continent’s impressive growth prospects. As a company that operates right across Africa, we at Diageo understand the increasingly important role business journalism has in creating the right environment to operate successfully and to attract long-term investment. As I look back over the development of these Awards, I recognise a sizeable shift in the standards of business journalism and the increased efforts of the media both inside and outside of Africa to promote trade and enterprise on the continent. I take great pride that Diageo can celebrate these achievements and look forward to another year of outstanding contribution.”

As the Diageo Africa Business Reporting Awards approach their tenth anniversary, Diageo is continually thinking about ways to evolve the Awards’ relevance, impact and reach. Diageo hopes to build on the success of previous years, welcoming entries from all media platforms and from all over Africa and beyond. This year, the New Media category has been removed as a separate category to reflect the ubiquity of multimedia use in modern news-telling. Submissions of pieces using new media are now encouraged across the board: all media, including blogs and other online material are eligible in every category.
The awards ceremony will be held on Thursday, 28 June 2012 in central London. The closing date for entry is Friday, 23 March, 2012.
(East African Breweries Limited)

East African Breweries Limited’s newly-introduced premium beer brands could cushion the firm from a fall in sales volumes resulting from future price increases, analysts at Old Mutual Securities have said.
A tough operating environment and constant tax increases have seen the brewer increase its retail prices in successive years, putting pressure on the sales volumes and profit margins of its traditional mainstream products.
Old Mutual Securities said that the introduction of premium brands will help EABL to attract middle-income and high-end consumers who are more likely to keep buying the same volume of beer even in tough economic times, Business Daily reported on January, 19.
“This will allow EABL some pricing leeway especially when input costs rise or the government imposes higher excise taxes,” said the Old Mutual report.
The rate of inflation that is now at 18.93 per cent means consumers have less spending power, affecting discretionary spending such as alcohol.
This is a threat to brewers who only have brands targeting the low-end market since it means consumers will drink less.
EABL’s premium beer brands include Tusker Lite, Windhoek, Pilsner Ice and White Cup Lite while Tusker, Guinness and Pilsner are viewed as the mainstream beers.
Other competing premium brands in the market include Miller Genuine Draft brands by rival SABMiller, Heineken distributed by Maxim, the Sierra suite of beers by Ozbecco and Corona distributed by Viva Productline.
There is no clear definition on what makes a beer a premium brand.
However they are considered as those brewed using malted grains, hops, yeast and water.
Other definitions are qualitative such as a beer that represents a certain quality of lifestyle but the common thread is that consumers of premium beers have above-average income and are well travelled therefore do not mind paying extra for their choice of drink.
“Corona is the most expensive beer in Kenya. Our customers are loyal and they know the finest ingredients have been used to make it. They have come across Corona in the US, UK, Dubai and they love it, they are happy to see it in Kenya,” said Viva Productline chief executive Rupen Samani.
A Corona beer typically costs at least Sh250 and is not found in average pubs.
Analysts said that sales from such beers will be a key revenue generator for EABL over the next decade because the middle class will have expanded and beer consumption will have increased.
“The premium market may not yield much now but in the next five years it may contribute between five to 10 per cent of the top line,” said George Bodo, a research analyst at Apex Africa.
Some brands such as Windhoek, produced in Namibia, have better margins as the costs of production are lower in the country of origin.
Low consumption levels and a growing middleclass are the twin factors attracting the biggest beer brewers to the continent.
“The African region presents an opportunity for growth even as developed beer markets have reached maturity,” said the Old Mutual Securities report.
Africa accounts for 5.2 per cent of global beer production against regions such as Europe and Asia which produce 30.6 and 32.9 per cent respectively.
Eric Musau, a research analyst at Standard Investment Bank said that as the Kenyan market grows, incumbents such as EABL will also have to face competition from other brewers.
The Alcohol Drinks Control Act which regulates the production, packaging and sale of alcohol is also seen as a major factor driving EABL’s fortunes.
The law has been blamed for poor sales because it limits drinking hours. But it has allowed sale of traditional drinks under certain regulations.
Following the new rules, the Central Nyanza Ethanol/Chang’aa Brewers Association has expressed ambition to move from bootlegging to formal brewing in compliance with standards set by agencies such as the Kenya Bureau of Standards.

Beer maker East Africa Breweries Limited (EABL) has increased the prices of Castle Lager and Redds brands, one month after it increased prices of its other products to cover for rising costs of raw materials and increase its revenue in the sluggish consumption market, Business Daily Africa reported on May, 17.

Retail prices of the 500ml Castle beer and 330ml Castle and Redds brands increased by between Sh7 and Sh15 to Sh105 for the Castle Lager and Sh95 for the Redds cans.

The increase means consumers will have to dig deeper into their pockets as bar owners are expected to increase their prices by between Sh10 – Sh50 especially in Nairobi where beer is sold at a premium above the recommended retail prices.

EABL produces the Castle brands under a distribution agreement with South African beer maker SABMiller signed in 2002. The contract is set to expire by end of this year.

Growth in beer sales has been sluggish since the introduction of the Alcoholic Drinks Control Law (Mututho Law) that limits the amount of time a bar is open.

Its time restrictions limit bars to serving alcohol between 5 p.m. and 11 p.m. compared to previous 24-hours operation.

“Drop in our distribution volumes has gone down by about 25 per cent since January this year although we do not think it will go any further down,” said Agens Mwareka, of Beverage Distributors Limited that operates in Nairobi and environs.

Research by investment bank Kestrel Capital released last month identified the Mututho law as “the biggest risk” to EABL’s business. The law came into effect in November 2010.

“The price increments are mainly meant to cushion against the drop in volumes brought about by the alcohol control Act,” said Wycliffe Masinde, an investment analyst at Kestrel Capital Limited said.

In effecting the earlier price increase for Tusker, White Cap and Guinness, analysts said EABL executives worked on the understanding that most consumers who are feeling the heat of Kenya’s soft economy have fallen off the company’s radar and that any cutback in consumption that may arise from the price adjustments is unlikely to affect sales.

07.09.2010 Kenya: East African Breweries welcome signing of new law set to revolutionize Kenyan beer market
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East African Breweries Limited has welcomed the signing of the Alcohol Drinks Control Act into law, saying it will ensure consumers get quality alcoholic beverages, Capital News reported on September, 3.
According to Corporate Affairs Director Ken Kariuki, the high fines imposed on counterfeiters will ensure that any alcohol brewed is superior.
Mr Kariuki said other than shielding consumers from low quality products, it will ensure manufacturers get value for their money since it will eliminate the counterfeits and low quality dangerous drinks.
"The act is very explicit that anyone contravening this will be liable for a fine of Sh5 million which is a very huge amount of money. This is going to cause determent in this area," he said.
During an interview, Mr Kariuki lauded the Act saying it encourages responsible drinking.
"I want to urge anyone who is aware of anyone selling alcohol to an underage to report this to the authorities," he said.
On the new advertising regulations, he said the company's adverts comply with the new regulations. He said the company has phased out adverts that promote beer as a drink that enhances social success as required by the new law.
The company also a while ago launched the "responsible drinking" initiative that encourages drinkers to designate a sober person to be the driver.
The Act is set to revolutionize the beer brewing market by licensing traditional/illicit brews in the country but regulate the sale and manufacture.
The State shall license brewers and ensure that the traditional beers are manufactured under very hygienic conditions and that their ingredients are within set standards. These beers will no longer be sold in jars and cups as has been the tradition. Brewers will be required to pack them in bottles of not less than 200 milliliters.
The new law will also regulate the general sale and advertising of beers in the country. It outlaws adverts that promote beer to enhance concentration and social and sexual success.
A powerful District Alcoholic Drinks Regulation Committee shall be put in place to regulate the sale of beer in the specific districts. This committee shall be in charge of licensing bars and brewers.
The District Committee shall consist of the District Commissioner who shall be the chairperson, the District Medical Officer of Health, Officer Commanding Police Division, one person nominated by every local authority in the district, three residents of the district appointed by the Minister, and one person designated by the relevant agency to be a secretary.
Bars will be required to acquire annual licenses and ensure their premises are at least three hundred meters from a primary or secondary school.
Secondly, the sale of an alcoholic drink in a supermarket or such other related retail chain store shall not be allowed unless the applicant has taken measures to ensure that the area in which the sale is to take place is not accessible to persons under the age of 18 years.
Bar operators will be responsible of controlling disturbances in their premises.
"When they see drunken behavior they will have to put an end to it by for example having the individuals responsible exit," said Mr Kariuki.
The law gives the Provincial Administration and Internal Security Minister powers to set the drinking hours in the country.

Sales figures of Tusker beer, the most important brand of East African Breweries have defied recent increases in excise duty on beer and rose up due to an on-going promotion and World Cup related expenditure, Standard Media reported on July, 7.
According to Martin Nyongesa, the sales manager at one of the country’s largest beer distributors, Rwathia Distributors, consumption of Tusker has gone up by almost 60%.
"Ordinarily we sell up to 2,500 cases of beer, but since the advent of World Cup, we’ve been doing about 4,000 cases a day," says Nyongesa, who attributes the massive increases in sales to higher circulation of Tusker.
Nyongesa says the increase in sales began immediately after the launch of a promotion dubbed ‘Tusker 50 Mili ya Mafans,’ which seeks to reward consumers with cash and prizes worth over Sh50 million (over USD 600 thousand).
"The promotion has helped increase the numbers for Tusker. Other brands like Guinness have also seen significant increase in consumption, but Tusker has been phenomenal," says Nyongesa.
Not long ago, it was widely believed that beer makers and consumers would be the main losers in the 2010/11 budget, after Finance Minister Uhuru Kenyatta increased excise duty on malt and non-malted beer from Sh54 and Sh45 per litre, to Sh65 per litre and Sh55 respectively.
This saw a marked rise of the recommended retail price of beer with that of Tusker climbing from Sh85 to Sh90. Some outlets even went above the five-shilling margin and instead increased prices by bigger margins.

The KES997 bln budget unveiled on June, 9 by Kenya’s finance minister, Uhuru Kenyatta, stipulates an increase in excise duty on beer, The New Vision reported on June, 10.
Excise duty on beer went up from KES45 to KES55 and that of malt beer up from KES54 to KES65.East African Breweries Ltd has reacted to the news by announcing an increase in the prices of its products effective June 11, 2010, Agra-net.com reports.
"Due to the tax increase on our products, we have had to increase prices effective June 11, 2010," EABL said in a published statement over the weekend. According to the new prices, Tusker Lager (500ml) now retails for KES90, Tusker Malt KES95, Pilsner (500ml) KES90, Guinness (500ml) KES100 while the two white cap brands - lager and light, will retail at KES100.
According to an AllAfrica.com report, Keroche Breweries is projecting that a majority of low income earners might be locked out of the bottled beer cadre, as they seek cheaper options.
The increase has come at a time when the local beer market has been eroded by slowed economic growth and high cost of production.
In contrast though, depending on the location of the retailers mostly bars and restaurants, the prices vary from KES100 to KES250 for a 500ml bottle of beer. The increase in prices will therefore definitely trigger a ripple effect on prices enjoyed by the consumers countrywide, in similar patterns.
"We are still running some scenarios around the next tax increase, however, the increase of KES11 per litre is quite high, and we have been forced to adjust our retail prices," Mr Ken Kariuki, EABL's corporate affairs director said. "We have, however, begun reaching out to the government to see how best we can work on a solution that is mutually beneficial."
In his speech, the minister asserted that the increase is a moderate adjustment to factor inflation. Mrs Tabitha Karanja, chief executive officer of Keroche Breweries whose brands Summit Lager and Summit Malt have gone up by KES5, fears that sales might drop, as the move to increase excise duty will scare away potential drinkers.
"We are new in the beer business and what the government is doing is scaring away potential investors. With the prevailing hard economic times and now a price increase, beer is not going to be an option for many Kenyans who are struggling to make ends meet," Mrs Karanja said.
"The government should reduce the rate of taxation if it is to encourage more people to use these products. In the end, when more people drink, more revenue is generated and hence more money for the government, that's how I understand it," she added.
However, in what might further put more pressure on the beer market segment and push more consumers to cheap spirits, the minister deleted the provision that prohibited packing or selling of alcoholic beverages in containers of less than 250 ml. This provision was introduced in 2004 as a means to discourage packing in sachets, which was considered to encourage underage drinking.

East African Breweries Ltd has acquired rights to market and distribute Namibian premium beer, Windhoek Lager, in the region, The Nation posted on April, 9.
The agreement with Namibia Brewery Limited will see EABL import the product directly from the South African country and engage in its brand building activities in East Africa.
EABL Group managing director Seni Adetu said the new beer, an addition to its other range of products, would meet a growing consumer diversity and demand for quality by customers.
“With Windhoek Lager, we are able to offer our consumers a beer which is made in the old age tradition of Reinheitsgebot, mixing the perfect combination of three natural ingredients: malted barley, hops and water,” he said.
The beer, whose recommended retail price is Sh100 for the 330ml bottle, is targeted at the high end consumer and thus will be distributed to the top-end outlets.
This adds to the company’s premium beer brands like Tusker Malt Lager, Guinness and White Cap already in the market.